Michael J. Rosen

Michael J. Rosen is President of ML Innovations, Inc., a fundraising and marketing consulting firm serving nonprofit organizations and the companies that assist them. An AFP Certified Master Trainer and winner of the prestigious AFP/Skystone Prize for Research, Michael is the author of the bestselling book "Donor-Centered Planned Gift Marketing."

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20 Factoids about Planned Giving. Some May Surprise You.

There is no such thing as a “typical” planned giving program.

The reality is that there are an infinite variety of such programs. They come in various forms in varied degrees of sophistication. Planned giving programs vary by organization type, donor population, organizational budget, and a host of other factors.

A small organization with a limited budget and a modest individual-donor pool may simply promote the idea of naming the charity in a will. By contrast, a large organization with a significant development budget may promote a broad array of planned giving vehicles from bequests to charitable gift annuities to trusts.

Despite the differences from one planned giving program to the next, there are a large number of points of commonality.

This list of 20 factoids about planned giving has been drawn from my book Donor-Centered Planned Gift Marketing. I’m sharing it here because I’ve found, when I’m speaking around the country, that these are some of the tidbits that people have found particularly interesting and/or that they have been surprised by. Here are the factoids:

1. Bequests are generally regarded as the most common form of planned gift. Charitable gift annuities come in at a far distant second.

2. Almost everyone has the ability to make a planned gift. Planned giving is not just for the wealthy. Consider the following:

Among survey respondents over age 30, 69 percent expect to leave an inheritance. (The Stelter Company)

People over the age of 50 control 70 percent of all privately held financial assets in the United States. (U.S. Census Bureau)

A 2005 study found that 50.3 percent of U.S. households owned equities in some form. (Investment Company Institute and Securities Industry Association)

3. Bequests are the major gift of the middle class. Many individuals wish they could provide significant current support to the nonprofit organizations they love. Unfortunately, they’re not in a financial position to do so. They either don’t have the cash to give or need to preserve their resources to live off of during retirement. Planned giving gives these individuals the opportunity to make a significant gift without pain. For example, a donor can leave her home to her favorite charity upon her death. Or, a donor can give to his favorite organization and receive an income for life. Planned giving allows donors to make more significant gifts than they might otherwise be able to make.

4. The average age of someone who makes their first charitable bequest commitment is 40-50. This means there is a great deal of time between when the donor includes a charity in his will and when the gift will be realized. That’s one reason why sound stewardship is essential. A nonprofit organization wants to remain in the donor’s will and encourage the amount of that commitment to grow overtime.

5. High-income women are more likely than men to use complex gift planning tools. While it is unclear why this is the case, we do know that high-income women are more willing than men to establish a trust, for example. You can read more about the giving of women by reading my post “Men v. Women: Who are the Best Planned Giving Prospects?”

6. Women are more likely to give a bequest to religious, health, human services, and environmental organizations than men.

7. Those without children are far more likely to make a planned gift. The presence or lack of children is the greatest indicator of whether or not someone will make a charitable bequest commitment.

8. Only 5.3 percent of those over 50 have made a charitable bequest commitment.

9. 33 percent of Americans are willing to consider a charitable bequest. This means that there is a great deal of untapped potential.

10. While 1 percent of Americans have created a Charitable Remainder Trust, 5 percent are willing to consider one. Again, this reveals that there is a fair amount of untapped giving potential.

11. Among those over 30, only 22 percent say they have been asked for a planned gift. This could explain why there’s so much untapped potential.

12. Once donors name a charity in their will, they almost never remove it. It’s solid stewardship practices that will minimize the defection rate.

13. Only 37 percent of those over 30 are familiar with the term “planned giving.” So, while we may use the term internally, we should be careful how we use the term in public. It’s usually better to talk specifically with donors about what you want. For example, if you want the donor to include your organization in his will, say that. If you want a donor to establish a charitable gift annuity, say that.

14. Real donor stories work much better than fictional, composite stories. Real stories can touch the emotions in ways a composite story simply cannot.

15. For ads and letters to those over 40, a larger font is needed to get them read. If people have to struggle to read something or go hunting for their reading glasses, the chances that they will indeed read the item are greatly reduced. Respect your older prospects and their older eyes.

17. Donors usually give to things or causes that are important to them, not for the benefits. So, when talking to prospects about planned giving, focus on their motivations.

18. The best source for information about a prospect is the prospect. People love to talk about themselves, so we need to be good listeners. We’ll learn a lot. But, even if a prospect is reserved, we can still learn a great deal from them. For example, when meeting with a prospect in her home, we can look for all kinds of clues. For example, are there photos of children and grandchildren, is the home worth a great deal, is there art on the walls, etc.? Of course, remember that being an observer is different than being a snoop.

19. Tax avoidance is not a powerful motivator for planned giving. While some donors might be interested in structuring a gift in the most tax-advantaged way possible, it is not why they will give to your organization. That’s because they can probably get the same benefits going to any other nonprofit organization in town. So, while tax avoidance might be a motivator in general, it has little or nothing to do with what motivates a donor to give to your specific organization.

20. Organizations will not usually get the gift unless they ask for it. So, ask!

24 Responses to “20 Factoids about Planned Giving. Some May Surprise You.”

This is an excellent post, Michael. Factoids 9, 10 and 11 reveal the untapped potential. After talking with you about this, we in Oregon have decided to start with a demonstration campaign involving about a dozen organizations. They will be coached on mounting an effort to encourage bequests. As we show positive results, we will roll out the campaign to the larger community.

Michael, very interesting, especially No. 19. I’ve gotten into discussions in the past about the perceived importance of a steep inheritance tax as an important motivator for planned giving. What data do you have that shows that if it were steeply reduced or eliminated altogether, that planned giving and bequests would not deleteriously be affected?

Steve, thank you for your comment about one of my favorite topics: Taxes. Just to be clear, tax avoidance does not motivate anyone to give to a particular charity since they can get the same benefits from virtually any nonprofit organization. However, some data does exist that suggests that tax avoidance strategies do impact whether or not someone will give to any charity and how much they might give. Unfortunately, much of this “data” is really anecdotal or based on surveys that ask people “what they would do if.” Those types of surveys are notoriously inaccurate.

There are those on both sides of the death-tax issue who argue that a reduction or elimination of the tax will impact giving one way or another. I just haven’t seen anything definitive on the subject. Our nation’s recent test with reduction and elimination of the estate tax doesn’t even shed much light on the subject since the changes were not long-term and no longitudinal studies have been made on the impact of the policy change.

By the way, there are those who suggest that even if changes in the estate tax result in fewer planned gift dollars, this will not necessarily result in a long-term decrease in philanthropy. The reasoning is that more money will flow through to the next generation. When people have more money they give more. So, while someone who dies might not give as much or at all through his estate, his heirs might give more since they will have more with which to give. Of course, folks have debated about whether or not the heirs would give enough “extra” to offset the decline in giving from the deceased.

I think that changes to the estate tax are likely to have some sort of impact on planned giving. However, we simply don’t really know what that impact will be or how significant it will be. Nevertheless, I firmly believe that we should not decide our nation’s tax policy based on philanthropic outcomes alone. Tax policy should be determined by fairness (Ha, let’s try and define that!) and on the impact to society in general.

One final thought: The estate tax was created in 1916 in the lead up to the US involvement in World War I. Nope, that’s not a typo. World War I. The tax was increased in 1917 to help pay for the war effort. I suspect we’ve paid off our WWI debt already. So, why do we still have the estate tax? It just goes to show you that once a tax is created, there’s a very slim chance it will ever go away. Government simply loves all the ways it can pick the pockets of its citizens.

I was recently asked what percentage of people who leave a bequest to one organization are also likely to leave one to another. She had seen a loyal donor listed on another, similar organization’s list of legacy society members and wondered if that meant the donor was more or less inclined to leave a gift to her organization.

Greg, thank you for the terrific question. A number of years ago, Robert Sharpe, Jr. did a presentation during which he pointed out that donors will put, on average, up to six charities in their will. I could be wrong about the number “six.” In any case, it was several but far fewer than a donor supports through annual giving. But, that number, whatever it was, was described as a maximum. I have not seen any studies that reveal whether someone is more or less likely to make a bequest commitment to Charity B if they have already done so with Charity A. My gut feeling is that it is probably better to be the first nonprofit in the door. Anecdotally, I know a lot of people who have Charitable Gift Annuities with more than one charity. Again, you raise an interesting question and a great topic for further investigation. Any researchers reading this?

Jeff, thank you for your comment. I anticipated your first point. That’s why I stated, “Bequests are generally regarded as the most common form of planned gift.” From previous discussions, I know you do not believe that bequests really are the most popular form of planned giving. But, I don’t think even you will deny that they are nevertheless generally regarded as the most popular.

As for your second point, I don’t understand your math. If 6% of Americans (actually 5.3% of those over the age of 50), have included a charity in their will, how does that make bequest giving irrelevant to 98.5% of the general public? Wouldn’t the number be 94.7%? Ok, let’s leave that alone for now. Instead, let’s do some comparing. Let’s use my number of 5.3% of Americans who have named a charity in their will. That’s more than the estimated 0.008% who are believed to have a Charitable Gift Annuity or the 1% who are believed to have a Charitable Remainder Trust. So, it appears to me that charitable bequests do lead the way. Unfortunately, I don’t have any stats for the percentage of donors who contribute appreciated securities or other types of planned gifts.

I want to take this opportunity to clarify my original point about CGAs. I believe that nonprofit organizations most commonly promote bequests followed by CGAs. Despite this, it appears that CRTs might actually be a bit more popular among donors than are CGAs. But, the statistics for both are sketchy at best so it’s difficult to precisely rank these giving vehicles.

Things to remember when dealing with planned giving are that you want to create a real and lasting relationship with the donor before asking for a planned gift. Like any large gift request, you don’t just go up to a person with no relationship to your cause and ask them to leave you something in their will. You should also make suggestions and let them know their options, but always encourage them to talk to a financial adviser to find out what options will serve them best.

Richard, thank you for your comment. You’re correct. Relationships are important. However, I want to stress that it is the relationship between the prospect and the organization that is most important. The relationship between the prospect and the development professional is secondary. Let me illustrate this point.

I was involved in a bequest marketing campaign for a rural community hospital. We focused on marketing to those who were the hospital’s most loyal supporters, specifically grateful-patient-frequent-donors. However, we also successfully tested going to the community at-large. This test group had never donated to the hospital. These individuals may or may not have ever used the hospital. However, we suspected that they would be intensely loyal to the hospital since it was the only one in the region. We were right. The test worked. The reason it worked was that the hospital had a special “relationship” with the entire community.

So, getting back to your original point, relationships are indeed critically important. However, how we define “relationship” will vary from organization to organization. The bottom line is that the stronger and more positive that relationship is, the more likely the organization is to secure a planned gift.

So little to add here – you’ve hit the nail so squarely on the head with each of these 20 points! This is the type of post that sums it up nicely and could be helpful for a lot of fundraising professionals who are working to broaden the understanding of gift planning with peers and volunteers.

Christina, thank you for your very kind comment. Some people are overwhelmed by the idea of planned giving. I thought that sharing the 20 Factoids would be of interest to folks and, for some, help make the idea of gift planning a bit more accessible.

Always interesting to read such useful summaries of the US situation. Our situation in Australia is substantially similar. Different statistics and scale, absence most tax-advantaged bequest substitute vehicles such as charitable remainder trust, but the basics indicate the same general direction.

I had a great experience early on with a wise and very long-serving planned giving executive at The Nature Conservancy in Maine, who basically said (my paraphrase) “however fascinating all the complex tax stuff is, remember that most of the good we do is with vanilla bequests”.

This is true in “numbers of donor” terms, perhaps a little less so in “dollar” terms in the USA. That is, efforts spent on small numbers of very large, complex planned giving might yield dollar value to the charity’s cause which is proportionately much greater than the number of bequest donors involved.

Roewen, thank you for sharing your insights from Australia. From the donor’s perspective, naming a charity in a will is the easiest of all planned giving options. Because of this, bequests have the benefit of being something of a gateway planned gift. In other words, if someone includes a charity in her will, she becomes a great prospect for other gift planning vehicles. That’s one reason why it’s valuable to identify and properly steward these individuals.